How Do You Deal With a Deadbeat Customer? Four Thoughts

Situation: A company faces a difficult situation. One of their customers placed a substantial order for custom product a year ago. They have taken delivery of some product but the bulk of the order is still in the company’s warehouse. The company negotiated a cancellation fee with the customer, but they haven’t paid. What is the best option for the company? How do you deal with a deadbeat customer?

Advice from the CEOs:

  • Because the customer is unresponsive, be ready to take legal action. Get an attorney. The initial process to prepare for a suit may cost $5,000-7,000. Therefore be prepared to sue for damages plus legal fees, with the threat that liens will be put on the customer’s business during the settlement process.
  • Once everything is ready for a suit, talk to the customer – the message is either they pay in full what they owe or you’re ready to file a suit which will cost them much more.
  • The Uniform Commercial Code may cover you for custom product. Check this out. This is important so that the company won’t be exposed to a countersuit for filing a frivolous suit.
  • A route which may be less expensive is to hire a lawyer on a contingency basis. Contingency lawyers may want up to 40% of the settlement or judgement to take a case, and the value of the case has to be large enough to attract their attention.


2 thoughts on “How Do You Deal With a Deadbeat Customer? Four Thoughts

  1. ricardo raymond

    Sack the chief sales and marketing officer for being so gungho in taking such a large order without the necessary safeguards.
    what else more. Do you want the cmso to bury the company with cavilier sales and marketing strategies?

  2. Sandy Post author

    Interesting recommendation, Ricardo.

    This is a small company, so the CMSO is also the CEO. Chalk this one up to being too trusting with a customer that the company did not know very well.

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